US President Donald Trump delivers remarks on the “Profitable the AI Race” AI Summit on the Andrew W. Mellon Auditorium in Washington, DC, on July 23, 2025.
Andrew Caballero-reynolds | Afp | Getty Photographs
Brussels is making ready for a no-deal situation as uncertainty persists about if and when a commerce settlement between the European Union and U.S. will materialize.
Lawmakers on Thursday signed off on a serious bundle of counter-tariffs which might goal a variety of products and discussions are reportedly ongoing about deploying the EU’s so-called “trade bazooka.”
Measures may kick in quickly as there are only a few days left earlier than Aug. 1, after which EU imports to the U.S. are set to be slapped with 30% tariffs and the EU is predicted to reply promptly.
Talks of a potential deal have nevertheless additionally been heating up this week, with sources telling CNBC that the present base-case situation for a deal features a 15% tariff on EU imports to the U.S. Any attainable exemptions are nonetheless being labored out, they famous.
However crucially, a lot will depend on U.S. President Donald Trump, who is understood for last minute changes of coronary heart and fast resolution making. There are subsequently no ensures about what a possible deal may appear to be.
Retaliatory tariffs
This week the European Fee mixed two packages of proposed duties into one checklist, which totals tariffs on 93 billion euros ($109 billion) of a variety of products from food and drinks gadgets to clothes and equipment.
A supply advised CNBC earlier this week that tariffs may very well be as excessive as 30%, mirroring these from the U.S.
EU member states reportedly on Thursday voted to approve the mixed checklist. The measures are set to come back into impact simply days after the U.S.’ Aug. 1 deadline.
Carsten Brzeski, world head of macro at ING, advised CNBC on Friday that he expects tariff-level retaliation from the EU within the absence of a deal.
“In a non-deal situation with out one other delay of US tariffs, I see the EU going for a tit-for-tat method, ie imposing 30% tariffs on chosen US items, not but all items, just like the well-known bikes, vehicles, clothes and alcohol,” he mentioned in emailed feedback.
“Provided that European nations usually are not totally aligned on how one can react, I can not see the EU going full in however relatively looking for a steadiness between displaying that it reacts however with out going past the US measures,” Brzeski added.
The ‘commerce bazooka’
One other extensively mentioned possibility is the EU’s so-called anti-coercion instrument, which has been known as a “commerce bazooka.”
The measure is designed to be a deterrent, with the European Fee saying it could “be most profitable if there isn’t a want to make use of it.” But when a 3rd nation does interact in coercion, “the instrument permits the Union to formally determine cases of financial coercion and to reply.”
The bloc views financial coercion as interference from non-EU nations within the area’s insurance policies by threatening or imposing measures that impression commerce and funding.
Whereas the European Fee notes that dialogue and engagement can be a part of their response to such coercion, the ACI for instance, additionally permits for import and export curbs and restrictions on accessing the EU’s market.
The EU could possibly impose export restrictions no matter whether or not it deploys its anti-coercion instrument, mentioned ING’s Brzeski.
Alberto Rizzi, coverage fellow on the European Council on Overseas Relations, advised CNBC on Friday that though the ACI is taken into account the ‘nuclear possibility,’ “in actuality there may be room for flexibility in its software, so long as the retaliatory measures stay proportionate to the hurt of the coercion.”
Rizzi urged that regardless of the temper throughout the EU shifting to grow to be extra confrontational and supportive of “swift and substantial” retaliation in a no-deal situation, it’s unsure when the ACI may very well be activated.
“Retaliation is seen as a negotiating software by the EU, so the ACI will most likely be activated solely in a second part if there isn’t a response by the US after the tariff packages enters into drive — the EU would need to hold it as leverage relatively than utilizing it instantly,” he mentioned.
— CNBC’s Silvia Amaro contributed to this story.